NIG will underwrite the £20m FarmWeb account from 1 January 2002. The account, which consists of 65 UK brokers specialising in agricultural insurance, is currently held by Norwich Union (NU).

NIG is opening a 25-strong office in Gloucester to service the account. FarmWeb will become NIG's exclusive distribution channel to the agricultural sector and the account is expected to grow to £23m by the end of next year.

FarmWeb chief executive Elaine Pyke said NIG's willingness to set up a joint office in a farming centre was crucial to it winning the contract.

Taking a swipe at NU, Pyke said: "We've been in contact with our members and they're delighted that we're switching to a broker-supporting insurer like NIG," she said.

"After a period of bad news for the agricultural sector, we're pleased to be working with an insurer that's truly committed to supporting this industry.

"We're confident the business model we've adopted will ensure our members receive first-class service."

Pyke has used the changeover to renegotiate covers, rates and terms for FarmWeb's clients and remuneration packages for brokers.

NIG commercial division managing director Charles Earle said NIG had wanted to break into the agricultural market for some time and the FarmWeb deal would give it a vital market share.

He said NIG had recruited experienced agricultural staff in preparation for the deal. "We see agricultural insurance as an important area for us."

"We'll be concentrating on working closely with FarmWeb and their members to deliver the service required."

FarmWeb and NIG are currently organising roadshows to brief brokers on the change.